BASF Lifts 2020 Sales Target To 115 Bln Euros

11/29/2011 7:40 AM ET

BASF SE (BASFY.PK,BFA.L), the world's biggest chemicals company, on Tuesday lifted its 2020 sales target, as it projects chemical production, mainly in emerging markets, to grow faster than global gross domestic product. The company also announced a program to increase competitiveness and profitability, which it expects to contribute around 1 billion euros to earnings by the end of 2015.

Furthermore, the company plans capital expenditures of 30 billion to 35 billion euros between 2011 and 2020, of which it plans to invest more than one-third in emerging markets.

BASF now projects sales of approximately 115 billion euros by 2020, representing an average 6 percent increase per year. The company's previous sales target was 90 billion euros.

BASF also aims to achieve earnings before interest, taxes, depreciation, and amortization, or EBITDA, of 23 billion euros over the next eight years.

In the year 2010, the company's sales were 63.87 billion euros and EBITDA was 11.1 billion euros.

BASF, which has a portfolio ranging from chemicals, plastics, performance products and agricultural products to oil and gas, forecasts the global economy to grow by an average of 3 percent per year, and thus slightly faster than in the past 10 years, while chemical production would grow on average by 4 percent per year. Meanwhile, the company continues to aim to grow 2 percentage points above chemical production.

Of the projected results, around 30 billion euros of sales and 7 billion euros in EBITDA would come from products that have been on the market for less than 10 years, the company noted.

BASF also projects that current emerging markets would contribute 45 percent to sales by 2020, in comparison to approximately one-third of total sales in 2010, excluding Oil & Gas segment. The company's sales to customers in emerging markets have almost tripled in the past 10 years.

In October, the company stated that sharply higher prices boosted its third-quarter revenues, even though the profit was hurt by suspension of oil production in Libya.

At that time, Kurt Bock, the Chairman of BASF's Board of Executive Directors, had said that the company remains cautious citing a likely slowness in the economy. In particular, Bock noted that credit restrictions in China as well as the debt crises in Europe and the United States were expected to adversely impact economic growth.

BASF shares are currently trading at 50.19 euros, up 0.66 euros or 1.33 percent on Frankfurt's Xetra.

In the U.S., the company's shares closed on Monday at $65.70, up $3.30 or 5.29 percent.